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Be Your Own Analyst

Here’s how to make your own judgments about the state of the RFID market.

By Kevin Ashton

May 14, 2005—ave been wildly conflicting reports about the state of RFID today. Some observers think the sky is falling. When an analyst firm recently downgraded how much each adopter would spend on RFID from $200 million to less than a million, it concluded the market is going cold. Others think the curtain is just rising on RFID. One financial Web site declared RFID to be among this year’s hottest investments, and several investment banks have published bullish RFID stock picks.

With such bipolar opinions from professionals, whom should you trust for market insight? Answer: yourself. The pros are outsiders and, as such, don’t have enough hard data or RFID experience to make solid judgments. But you’re on the inside, and with these five simple steps, you can reach sensible conclusions about what’s actually going on.

Be your own benchmark. I know one CEO who works out how much money is being spent on supply chain RFID by multiplying his own company’s expenditure by the number of other significant players in the market. He trusts that what’s happening to him is, more or less, also happening to everyone else, and builds from there. This is a good strategy: Assume your experience is typical, and value it highly.

Know your sources. Discount information from others, with the size of the discount based on how close the source is to the market. Perspective from a peer is probably valuable. So are news stories, case studies and even business analyses in a publication that has an established track record in covering RFID. But many articles in general business or technology magazines are just outsiders’ opinions and deserve less weight.

Spot trends. One valuable—and underutilized—exercise is watching your perspective change. Your sense of RFID today is likely to be subtly different than it was even a few weeks ago. Are there more vendors ready to sell you products you might actually be able to use? Are the problems you face today the same as last month’s, or have they changed? Recognizing these differences can yield valuable insights. Before you look forward, look back.

Don’t overextrapolate. Spotting trends has a pitfall—it can lead to crazy conclusions. Trends can change quickly. Much of the foolishness of the dot-com boom came from a failure to recognize this. A flash of growth was assumed to be a straight line of infinite expansion, instead of merely a blip. When you see a trend, expect it to be a curve—not a straight line.

Change your mind. Adjust assumptions that don’t fit new facts. Expect to be wrong, and don’t be afraid to admit it. The architecture or application that looked like such a good idea a few months ago may prove to be a disaster in practice. See things for what they are and move on.

Chances are, if you apply these principles, you’ll reach a conclusion similar to mine: Today’s RFID market is neither hot nor cold, but warming up nicely.

Kevin Ashton was cofounder and executive director of the Auto-ID Center. He is the author of a soon-to-be-published book about RFID. To comment on this article, click on the link below.

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